TIOL-DDT 957 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 957</font><br>
23.09.2008<br>
Tuesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Applicability
of service tax on Tobacco Board under the category of auctioneer service – CBEC
clarifies to MOC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC has clarified to the Department of Commerce that auctioning service provided by the Tobacco Board is liable to Service Tax. The request for exempting the service provided by Tobacco Board had been examined by the Finance Ministry and as usual with all recommendations of the Commerce Ministry, this too was not agreed to.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Board's Logic: </strong> Service tax is applicable on any service provided by any person, in relation to auction of property, movable or immovable, tangible or intangible, in any manner. However, such service provided to government is not taxable. The Tobacco Board undertakes auctioning of tobacco and levies a fee from growers and buyers of such tobacco. The service provided by the tobacco Board falls within the scope of auctioneer service. As regards the argument that Tobacco Board undertake statutory function and is performing purely on public interest, the circular No.89/7/2006-ST, dated 18.12.2006 (and subsequent circular No.96/7/2008-ST, dated 23.8.2007) explains that only such statutory/sovereign duties, the fee collected for which is compulsory/statutory and the same is deposited in the government account, would alone be not liable to service tax. In all other cases, service provided by a body created under a statute is liable to service tax. In case of Tobacco Board, the fee levied by it is discretionary within the ceiling limit prescribed under the statute; the fee is not deposited in the consolidated fund of India but retained by the Board; the Tobacco Board is a body corporate and prepare financial statement including income/expenditure, balance sheet etc. Hence the service provided by the Tobacco Board is not covered under the aforementioned circulars. Accordingly, the Tobacco Board is liable to pay service tax on auctioneer service provided by it for auction of tobacco.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has asked the Department of Commerce to issue directions to the Tobacco Board to pay up Service Tax- and of course copies of the letter had been sent to the field.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now field officers can book the Tobacco Board, created by a Statute, headed by an IAS officer, for fraud, collusion, suppression and impose mandatory penalty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/fileno137.htm" target="_blank">CBEC's F.No.137/87/2008- CX.4 , Dated: the 14th August, 08</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Assessment of tyres and tubes with flaps under Section 4A - CBEC clarifies</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has received reference from the field formations as to whether tyres, tubes and flaps when removed in pre-packed/packed form are covered under the MRP based assessment or not.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has examined the matter and clarifies that “The Ministry of Consumer Affairs have clarified in their letter dated 20.07.07 that the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 are applicable to tyres and tubes, when they are sold in pre-packed form.”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board further clarifies that, “It is a question of fact whether in a particular case tyres and tubes are sold in a pre-packed form. This has to be determined by the proper officer for the purpose of levy of Central Excise Duty/Additional Duty of Customs.”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2008/fileno6.htm" target="_blank">CBEC's F. No. 6/14/2007- CX -1 , Dated: the 12th August, 08</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Flower, Fruit & Vegetables – Additional Duty Credit Scrip</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For exports made w.e.f 1.4.2008, the following products shall be entitled for an additional duty credit scrip of 2.5%, over and above the normal VKGUY entitlement.</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. CUCUMBERS & GHERKINS PROVISIONALLY PRESERVED</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. CUCUMBERS & GHERKINS PREPARED/PRESERVED BY ACETIC ACID</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn083.htm" target="_blank">DGFT Public Notice No. 83 (RE-2008)/2004-2009, Dated: September 18, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ITAT - Work allocation of CIT (DRs)/Sr. DRs</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT has laid down fresh parameters for allocation of work between the CIT (DRs) and the Sr. DRs. for representation before ITAT.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(A) Cases to be argued by the CIT (DRs):</strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) All appeals relating to core cases of Search/Block assessment and such other cases of search, as are assigned by the CCIT.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) All appeals referred to a Special Bench or Third Member Bench of ITAT.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) All appeals filed against order passed under sec 263.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) <strong>All appeals, in which the aggregate of the additions made by the A.O. which are under dispute/subject matter of appeal in a case, is more than;</strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. Rs.2 crore in the cities of Mumbai and Delhi.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. Rs.1 crore in the cities of Chennai, Kolkata, Ahmedabad , Hyderabad, Bangalore and Pune and,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. Rs.50 lakhs in other cities, and</font></p>
</blockquote>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All Scam related cases.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>(B) Cases to be argued by Sr. DRS.:</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All cases other than those mentioned above.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CCIT may, in relaxation of the above parameters, assign cases to CIT (DRs)/Sr. DRs. in consideration of administrative requirements.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CIT (DRs)/Sr. DRs would also submit a monthly performance report on the cases/category of cases represented by them before the Bench in the prescribed proforma.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants this should be brought to the notice of all CIT (DRs) and Sr. DRs for immediate compliance.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Shouldn't the CBEC also have some such system?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2008/instruct0813.htm" target="_blank">CBDT Instruction No. 13/2008, Dated: September 19, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>External Commercial Borrowing Policy liberalised</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been decided to further liberalise the ECB policy as:-</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) At present, borrowers in infrastructure sector are allowed to avail ECB up to USD 100 million for Rupee expenditure for permissible end-uses under the Approval Route. Considering the huge funding requirements, particularly for meeting Rupee expenditure, it has been decided to enhance the existing limit of USD 100 million to USD 500 million per year for the borrowers in the infrastructure sector under the Approval Route. Borrowings in excess of USD 100 million should have a minimum average maturity of 7 years.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) In view of widening credit spreads in the International financial markets, it has been decided to modify the all-in-cost ceilings in respect of ECBs with minimum average maturity of over seven years.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2008/rbi08cir016.htm" target="_blank">RBI/008-09/190 - A. P. (DIR) Circular No. 16 Dated: September 22, 2008</a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600">– Tomorrow's cases</font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Capital gains Tax – exemption – purchase or construction of a residential property has to be in name of assessee only – investment in some other's name not allowed: Bombay High Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The scheme and purpose of Section 54F, which was inserted by the Finance Act, 1982 with effect from 01.04.1983 i.e. from the Assessment Year 1983-84 is with a view to encourage house construction. The object, therefore, is to give all benefits under this Section to the assessee on conditions as elaborated in the section. No such benefit is available to a person other than the assessee. It also means the assessee must comply with the conditions strictly as per this provision in all respects. The amount of capital gain arising from the transfer of the original asset which was not charged to taxes shall be allowed to be income chargeable under the head “capital gain” relating to long term capital assets of the previous year in which such residential house is so purchased or constructed.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notional interest on advances is includible in assessable value when assessee himself admits that a lower price has been arrived at by keeping in consideration interest derivable from such advances: Tribunal</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once the respondents have themselves admitted that a lower price has been arrived at by keeping in consideration the interest derivable from the advances, <strong>no further proof is required from the department</strong> and duty has been correctly demanded on the element of notional interest accrued which resulted in lowering of the price.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>When excisability is in issue, Department should insist on examination of process undertaken by assessee in manufacture of a given product, reiterates Supreme Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The show cause notice has not even alleged that the assessee is engaged in the manufacture of Shikakai powder by crushing shigekai pods and 'Reeta' being mixed and, consequently, the entire adjudication stands derailed. Further, it may be stated that mixing of ' Reeta ' has been held to constitute manufacture in numerous judgments. But, in this case, the respondent-assessee has specifically averred that they are merely powdering shigekai pods and that they do not add any herbal material thereto. Lastly, the adjudication authority has not insisted on examining the process undertaken by the assessee in conversion of the pods into powder.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements</font></strong></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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